2 Answers from Attorneys

We are missing some facts before a definitive answer can be given, but the short, generally accurate, answer is YES.

Among the other facts needed to make a final determination is the amount of debt, whether the business is incorporated or simply a d/b/a, what the value of the business's assets would be if the business was liquidated (i.e. sold at auction), etc.

Many attorneys offer free initial consultations. Your best bet at this point is to find a bankruptcy specialist who will give you a "free" half hour or so, and you will then be in a better position to decide how to proceed.

A small family business will usually be able to file a bankruptcy petition (or the owners will, if the family operate it as a sole proprietorship) and still continue the business. At least, the bankruptcy law and bankruptcy trustee will usually allow the business to continue. You should make sure you will have access to other vendors, as the ones who are discharged in a bankruptcy might not want to continue doing business with you. You also want to be sure that the debt is really unsecured; it may be secured by UCC or other filings. Most bankruptcy practitioners in the Southern District of Indiana, including me, will offer a free consultation so you can be better informed before deciding what to do. Good luck.